Rupee erases gains

KARACHI: The rupee erased previous session’s gains against the dollar and weakened by 1.15 levels on Friday as importer dollar demand and fast depletion in the foreign exchange reserves drove the local unit down, dealers said.

The domestic currency ended at 210.95 to the dollar, compared with Thursday’s close of 209.80 in the interbank market. It fell by 0.55 percent during the session.

The rupee lost 50 paisas to close at 211 per dollar in the open market.

“The increased demand from importers in absence of dollar inflows sent the rupee lower,” said a currency dealer.

Analysts said a continual decline in the forex reserves created uncertainty in the market, putting pressure on the rupee.

Though Pakistan has reached a staff-level agreement with the International Monetary Fund (IMF), which will pave the way for the disbursement of $1.17 billion to the country, the rupee remains under pressure. The agreement is subject to the IMF board approval that is likely to take place in August.

The central bank’s foreign exchange reserves fell by $99 million to $9.718 billion during the week ended July 7. The State Bank of Pakistan’s (SBP) reserves are hardly enough for five weeks of imports.

“PKR should likely settle in the 195-200 range once the uncertainty in the FX market subsidies. This is based on the recent most reading of REER [real effective exchange rate] of around 95,” said Saad Hashemy, executive director at BMA Capital Management. “FX reserves build up in the coming weeks/months will strengthen the market sentiments,” Hashemy added.